Gautam Adani and his family have built a huge fortune mining coal to fuel the energy-hungry India’s fast-growing economy. Businesses in the conglomerate span industries including infrastructure, ports, data transmission, media, renewable energy, defense manufacturing and agriculture. Adani’s net worth has skyrocketed by nearly 2,000% in recent years.
With a net worth of nearly $125 billion at the end of last year, Adani surpassed Amazon boss Jeff Bezos to briefly become the second richest man in the world, according to Bloomberg’s Billionaire Index. After last week’s losses, the Bloomberg index ranked him seventh richest in the world with a fortune worth $92.7 billion.
Hindenburg’s report said it found the top seven publicly traded Adani companies to be at an “85% downside purely on a fundamental basis due to skyrocketing valuations.”
Hindenburg said his report, “Adani Group: How the World’s Third Richest Man Pulls the Biggest Scam in Company History,” followed a two-year investigation. It listed 88 questions that the company had invited to answer. Most of the allegations related to concerns about the group’s debt burden, the activities of its top executives, the use of offshore shell companies and previous fraud investigations.
Investors began dumping Adani-linked stocks on Wednesday, wiping out about $48 billion in market value.
Over the weekend, Adani said it would continue its share sale in Adani Enterprises as planned, despite the value of its shares falling well below the offering’s price range. On Monday, Adani Enterprises was trading at 2,850 rupees ($35), up 3.2% but well below the band of 3,112 to 3,276 rupees originally set for the offering closing Tuesday.
In its response to Hindenburg, the Adani Group said none of the 88 questions in its report were “based on independent or journalistic fact-finding.” It dismissed numerous questions as unfounded, misleading or biased. In response to other questions, the group attached documents and tables of data and said they had followed local laws.
Adani also dismissed concerns about debt-fuelled growth, saying that the “leverage ratios of Adani portfolio companies remain healthy and in line with industry benchmarks of respective sectors.”
In an interview with CNBC TV-18 on Monday, Adani’s chief financial officer Jugeshinder Singh said the group’s gross debt was $30 billion, of which $9 billion came from Indian banks.
Hindenburg said only 30 pages in Adani’s response focused on issues it raised and the rest consisted of court documents, general information, corporate finance and “irrelevant corporate initiatives.” Adani did not specifically answer 62 of the 88 questions it asked, it said.
Late Thursday, Jatin Jalundhwala, head of the Adani group’s legal department, said the group is considering legal action against Hindenburg. Hindenburg said it stood by its report and would welcome legal action from the Adani group.